Brazil's monetary policy committee, the Copom, opened its meeting on Tuesday (Sept 15) at the Central Bank headquarters in Brasília, chaired by Gabriel Galípolo, and financial markets widely expect it to deliver a fifth consecutive cut to the country's benchmark interest rate. The consensus bet, reported by Folha de S.Paulo, is a 0.25 percentage point reduction that would take the Selic, as the benchmark rate is known, from 14% to 13.75% a year. The decision is due on Wednesday night (16), in the committee's last meeting before the presidential election.
The case for easing rests on the domestic economy. Since the August meeting, according to Folha, economists have grown more convinced that activity is slowing and inflation is easing. In the Focus bulletin, a weekly survey of market forecasts released by the Central Bank on Monday (14), the median projection for the Selic at the end of 2026 stood at 13.75%, a reading the market takes as a sign this may be the final cut of the cycle. The same bulletin showed 2026 inflation, measured by the IPCA index, easing from 5% to 4.9%, still far above the 3% center of the official target, which carries a tolerance band of 1.5 percentage points.
Against the global current
While Brasília prepares to cut, the world's major central banks are raising rates. On the same Wednesday, the Fed in Washington is expected to lift its policy rate from a range of 3.5% to 3.75% up to between 3.75% and 4%. Last week the European Central Bank in Frankfurt raised its deposit rate by a quarter point to 2.5%, and bets are growing that the Bank of Japan in Tokyo will raise its own rate from 1% to 1.25%. The common driver is the war in the Middle East, which has pushed oil prices back above US$ 100 and stoked global inflation. Economists heard by Folha still judge that the external scenario should not change the Brazilian bank's plan to cut.
Cautious wording and criticism of the pace
Research desks at Itaú BBA, C6 Bank, Suno Research and Daycoval, surveyed by Exame, see the quarter-point cut as the most likely outcome, with attention focused on the tone of the statement. Itaú BBA expects a unanimous decision and projects that the Central Bank's own model will keep its inflation estimate at 3.2% for the first quarter of 2028, the committee's relevant horizon, with risks described as asymmetric to the upside. C6 Bank cut its year-end Selic forecast from 14% to 13.75% and expects the rate to hold through the remaining meetings of the year. Its chief economist, Felipe Salles, expects cautious communication:
"The Committee should justify the continued calibration of interest rates given the projection of inflation around the target over the relevant horizon. However, inflation expectations above target, a tight labor market and the resilience of economic activity still require contractionary monetary policy."
Not everyone agrees with the pace. Fabio Kanczuk, a former Central Bank director, argues the committee is guided by a very strong belief that current rates are high enough to cause a very large contraction of the economy ahead, an assessment he calls mistaken. In his view, the committee should not keep cutting the Selic if it wants to secure the convergence of inflation to target.
Gustavo Sung, chief economist at Suno Research, sees the domestic picture as more favorable than in previous months, with current inflation falling and activity losing steam. If the Focus median proves right, this will be the last cut before Brazilians choose their next president, and the remaining question for the committee is whether to hold the rate at 13.75% in the meetings left this year.